High Court hands down a club to beat patent trolls with
Businesses who receive threats from patent trolls now have another weapon in their arsenal, as the High Court has made an admittedly unprecedented ruling concerning disclosure requirements.
Patent trolls generally operate by acquiring patents and then asserting their rights with broad and often vague claims that other similar technologies infringe their rights. Through pursuing or threatening legal action against organisations which they allege use their patented technology, they can pressure those organisations into taking up licences or making one-off payments.
In this case, on being threatened with litigation by the patent troll (T), Big Bus Company Limited (B) was prepared to settle T’s claim through a commercial agreement. T had made repeated references to the numerous licences it had granted of its patent, and so B requested disclosure of the licences to properly evaluate the value of T’s claim and inform its decision on settlement before proceedings were issued. T refused, and B made an application for disclosure. The court allowed the application in respect of licences in the transport sector.
Patent trolls generally wish to individually negotiate with potential licensees, without them knowing what other licensees have paid, in order to maximise their profits. This judgment allows recipients of patent troll threats to use the civil procedure rules to require disclosure of certain relevant documents to allow them to negotiate on an equal footing. More generally, it typifies the modern approach to pre-action conduct and disclosure in that early exchanges of information should be used to avoid lengthy and costly litigation.